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Because much of the water marketed would pass through the Delta - the heart of the water supply system - its facilities need to be improved to facilitate transfers. Additional sticking points are the allocation of water for environmental needs and environmental effects of actual water transfers. In recent years, private companies have been making an entree into California's water market from a business standpoint. Investing in water as a commodity, companies like Cadiz Inc. Western Water Co.. Vidler Water Co. and Azurix have purchased WATER CONSERVATION Water conservation is an essential tool to stretch the water supply - or more accurately, to use the exist- ing supply more efficiently. Urban and agriculture conservation measures could reduce demand by about 1.2 million acre feet, according to DWR. Conservation helped many communities pull through the 1987-1993 drought. In 1991, several urban water agencies achieved a 25 percent reduction in water use trom 1987 levels. Agriculture is the single largest H'ater~('onsl/mil1g industry ill the state and efrorts to promote IWlter conservatio1l among farmers has grow/I as wafer supplies become tighter. 11 Urban water suppliers have developed and implemented water conservation practices known as Best Manage. ment Practices (BMPs). By 2000, more than 250 urban water agencies and public interest groups had signed a Memorandum of Understanding - an agreement to carry out established water conservation and reuse programs. These include the installation of water-saving plumbing fixtures and water meters on all new construction, public infor- mation programs, municipal landscape water conservation requirements and financial incentives to reduce water use. DWR estimates that implemen- tation of urban BMPs could reduce annual water demand by 900,000 acre-feet by 2020. For 2000, the Urban Water Conservation Council is collecting reports from participants to help determine the effectiveness of the program. DWR estimates that urban areas will be using 16 percent of the total water supply by 2020, up from land and/or corresponding water rights in order to sell water to those willing to pay. In some instances, these companies provide storage for other parties to bank their unused water supplies until they are needed. Some 01 these private interests have voiced concerns of being excluded from using state and federal facilities by the high prices commanded to use the systems. State and federal interests counter that private interest use of facilities should not be subsidized and therefore require payment for the full cost of using the facilities. 10 percent in 1990. Critics say there would be significant savings of water if farmers grew crops that required less water and/or if they managed water more carefully through use of drip irrigation or other water saving systems. Agricultural interests counter that farming is a vital water intensive business and that most of the applied water eventually returns to the rivers or seeps into the ground to recharge aquifers. They also point out that in drought years agriculture water is often the first to be cut. But, in late 1996, agricultural interests did sign a MOU promoting water conservation. Irrigation districts and water agencies agreed to carry out BMPs, known as Efficient Water Management Practices (EWMPs), which include construction and operation of tailwater reuse systems, automation of canal structures and installation of water meters to measure the amount of water delivered to water users. Neither the urban or agricultural BMPs are univer- sally endorsed. CALFED has Identified its Water Use Efficiency Program as one of the major program elements it plans to implement. According to CALFED, the program will conserve water through savings in the urban and agricultural sectors, as well as, via water reclamation projects. CALF ED estimates it can recover up to 1.4 million acre-feet of water currently being lost in less time than it would take to gain similar benefits through surface storage and convey- ance facility improvements, thus improving water quantity. Such water use efficiency also can improve water quality and improve the timing of instream flows, according to CALFED. Cost estimates for the voluntary program are between 51.5 and 52 billion during the first seven years of the program, with S500 million being invested by state-federal cost-sharing and 5500 million lrom matching local funds over the first four years.